WeWork (NYSE:WE) stock rose after naming board member David Tolley its permanent CEO. Tolley had been interim CEO since May and joined the board in February.
The co-working space company completed a 1-for-40 reverse split in September as it sought a turnaround.
WeWork rose 4% on Oct. 13 and another 6% over the weekend. It opened today at $2.39 per share, a market capitalization of about $126 million.
We Live? Or We Die?
WeWork hinted at trouble early this month by skipping $95 million in interest payments despite having the cash on hand. The move was seen as an effort to jump-start negotiations with lenders and landlords.
Shares in WeWork underwent a brief short squeeze on Oct. 13 after UBS downgraded the stock and cut its price target to $2.50 per share. Speculators at Stocktwits were hoping for more, with positive sentiment and high message volume.
Tolley was previously chief financial officer at Intelsat and has experience at units of Blackstone (NYSE:BLK) and Morgan Stanley (NYSE:MS). His main job now will be renegotiating leases to make WeWork a sustainable business.
WeWork also named Paul Keglevic, who has experience in bankruptcies, as chairman of its board. A critic noted that Tolley is not getting stock, an indication a bankruptcy filing is likely.
WeWork was once worth $47 billion but warned of bankruptcy in August after reporting a quarterly loss of $347 million, leaving it with just $680 million in liquidity.
I warned when WeWork came public in 2019 that its numbers didn’t work. Its S-1 filing claimed it could put workers into high-class office space for less than the price of a standard lease.
The story of WeWork’s rise and fall under founders Adam and Rebekah Neumann became the 2022 mini-series WeCrashed, starring Jared Leto and Anne Hathaway. Adam Neumann still had an estimated net worth of $2.2 billion in May.
WE Stock: The Bottom Line
If Keglevic and Tolley can’t squeeze concessions from lenders and landlords quickly, expect a Chapter 11 filing to follow.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
